There is an abundance of economic, domestic political and geopolitical information for markets to digest over the next nine days.
What signals are markets giving?
Bitcoin is back on record highs. Gold posted the highest closing price on record today. And global bond yields have sharply returned to levels of this past summer.
The optics here are "de-risking." Global capital seeking store-of-value. Devaluation of fiat currencies. Signs of an overdue rebuke of overindebtedness and egregious fiscal behavior.
With that, the same media and fiscal watch dogs that were unworried about multi-trillion dollar agenda spending over the past four years and record deficits that accompanied an already growing economy, are now pontificating about draconian debt and deficit outcomes from the next administration.
It's a story that's fitting the price.
But is it the right story?
If we look at bond yields, the yield curve returned to a positive slope last month, after two years of inversion. It has since steepened, and then shifted higher.
This can be interpreted as a bond market signaling increasing confidence in economic growth expectations.
And we happen to have a significant economic growth catalyst at work. It's not the Fed. It's not the election outcome. It's the ongoing industrial revolution, driven by generative AI.
With that, we heard from one of the tech giants working on the frontier of generative AI today.
Remember, in its earnings call over the summer Alphabet (Google) said: 1) the price to build generative AI computing capacity continues to go up, 2) the handful of companies that can afford to build it will spend whatever it takes on the infrastructure, 3) the AI model intelligence continues to rapidly advance, and 4) the stage of the technology revolution is still "early."
They reported on Q3 earnings today, and all of it still applies. They had record revenues with near record operating margins. And they will be investing even bigger in AI infrastructure in 2025. And the spend, in the words of the CFO, is "based on the demand of customers."
